What is a Same Day Payday Loan?

What is a Same Day Payday Loan?

Introduction To The Same Day Payday Loan

For some time now, the global credit crunch has impacted all areas of the credit market, including commercial property mortgages, personal loans and even home mortgages, which have historically been hailed as excellent investment vehicles.

The fragility of many lending institutes has never been so prominent, and the resulting fear has fuelled many lending industries into tightening their lending standards to the degree where many consumers are finding it increasingly difficult to secure a mortgage, a loan or even just a credit card.

With most people being accustomed to obtaining credit easily, this turnaround has really put the financial squeeze on those with poor credit ratings and/or low income; enter, the lenders who are willing to offer a virtually guaranteed credit facility with few or no questions asked.

The payday loan industry has grown rapidly since its popularity grew in the 1990's, and payday loans are now widely available. The industry is renowned for its quick and easy lending process (hence the commonly used term same day payday loan).

The Same Day Payday Loan: What It Is and How It Works

Payday loans are small short-term single-payment loans intended to carry a borrower with a temporary cash deficiency through to their next payday. The loans have minimum and maximum limits, but typically lie between $100-$1000, which is repayable after 2-3 weeks.

Reasons for needing this cash bridging loan can include: emergency repair bills, urgent health bills, or even less vital reasons, such as payment of time-limited sales offers or larger purchase deposits. As borrower screening is virtually non-existent, many people (those who are in need of quick and easy cash) approach payday lenders.

Potential borrowers are usua lly not required to disclose their credit history, debt, or any other personal information, with lenders generally only requiring identification, a checking account, proof of income (either from a job or government benefits), and a signed personal check, to secure the loan.

Modern technology has meant that the whole process can now be completed online, at virtually any time, day or night, and with minimal time and effort being expended. Several payday loan companies can be approached in a very small space of time, without having to deal with somebody face-to-face. This even less personal approach may be another reason people choose to use this method of borrowing.

While speed and ease of securing cash are huge benefits, there is obviously a downside to this type of borrowing, namely, inflated interest rates.

Payday lenders insist the current interest rates reflect the added risk they themselves are taking in financing these loans and that they are the only way for the industry to be profitable; while customers weigh up the pros and cons themselves, before committing themselves (or not) to a payday loan.

Whichever way you look at it, any business can only survive if there is a need to be catered for. As long as there is a need for borrowing, there will be a place for organizations prepared to service this need.